Answer (D) is correct . Materials, labor, and overhead (both fixed and variable) are examples of product costs. Abnormal spoilage is an example of a period cost. Abnormal spoilage is not inherent in a production process and should not be categorized as a product cost. Abnormal spoilage should be charged to a loss account in the period that detection of the spoilage occurs.
Answer (A) is incorrect because Direct materials are product costs.
Answer (B) is incorrect because Variable overhead is a product cost.
Answer (C) is incorrect because Fixed overhead is a product cost.
|
